There's a lot of public finance fetishism around, for example:

- Ed Balls promises to balance the government's current budget by 2020, without conditioning this on the state of the economy.

- People are questioning whether the taxpayer will ever recoup the money invested in RBS - ignoring the fact that if RBS hadn't been bailed out we might have had an even worse financial crisis which would have left us all poorer.

- The debate about the 50p tax rate has been mostly about whether it would raise revenue or not, when what really matters is its impact (or not) upon GDP.

- Owen Jones says a living wage would "save billions spent on social security", without noting that this is a bug, not a feature; it means a living wage, in itself, would be a fiscal contraction.

Underpinning these cases is the fallacy of petitio principii, or begging the question. Something is assumed which must in fact be proved - that the public finances matter. Given that the people lending to the government are happy to do so at nugatory interest rates, this is a big assumption. It also assumes that Keynes' words - "Look after the unemployment, and the Budget will look after itself" - are no longer relevant, without any proof that this is so.

You might reply that there is proof. The OBR estimates that there's a cyclically-adjusted (or "structural") deficit of 4.4% of GDP - which implies there'd be a deficit even if we did look after unemployment.

I'm not so sure. Estimates of the cyclically-adjusted deficit are massively uncertain, in part because they depend upon the mumbo-jumbo idea of the output gap. The best way of telling whether we have a structural budget deficit is to get the economy back to an acceptable level of activity, and then see what the deficit is. Let's look after today's problem today - of six million unemployed - and tomorrow's problems (if they exist) tomorrow.

But let's say we get to a reasonable level of activity, and there's still a deficit. What then?

By accounting identity, this can only mean that the private and/or overseas sectors are running surpluses - saving more than they are investing. Such surpluses are potentially demand-deflationary, in which case a fiscal tightening would add to upward pressures on unemployment.

What's more, if the private and overseas sectors are net savers, they are likely to be big demanders of safe assets - in which case demand for gilts might keep their yields relatively low. And if real yields are below trend growth, then a deficit is sustainable. (And if this isn't the case because
trend growth is low, then we have a bigger problem than the public finances.)

Now, I'll concede - unlike many MMT-ers - that it is theoretically possible that the deficit might matter: maybe investors would take fright at it and dump gilts and Bank of England buying of gilts might not solve this problem in a non-inflationary way. But this is a long story which needs to be
demonstrated. It is not good enough to merely assume this is a genuine threat and to assume the public finances matter - and even less good to jeopardize jobs on the basis of that assumption.

Instead, I fear that the importance given to the public finances in the public's mind rests upon some simple errors, such as silly talk about the "nation's credit card" and the daft idea that the public's finances are the nation's finances.

It might be good politics to pander to such irrationality, as Ed and Owen seem to be doing. But let's remember that good politics and good economics only rarely overlap.